South Korean regional banks saw their delinquency rates surge to near 1 percent at the end of last year amid high interest rates and the sluggish economy.

According to an analysis into the banks’ business reports on Sunday, the average delinquency rate at the country’s five major regional banks stood at 0.97 percent at the end of 2023, up 0.34 percentage point from a year ago.

The five banks are Jeonbuk Bank, Kwangju Bank, Daegu Bank, Kyongnam Bank, and Busan Bank.

Busan Bank saw the largest increase in its delinquency rate from 1.42 percent in 2022 to 2.18 percent in 2023.

The rate of Jeonbuk Bank, which stood at 0.69 percent in 2022, hit 1.09 percent, while that of Kwangju Bank and Daegu Bank increased from 0.33 percent and 0.43 percent, respectively, to 0.61 percent.

Kyongnam Bank’s delinquency rate soared to 0.34 percent from 0.3 percent.

The average delinquency rate at the country’s three internet-only banks was also high at 0.92 percent. KakaoBank’s rate stood at 0.49 percent, KBank 0.96 percent, and Toss Bank 1.32 percent.

Korea’s five major commercial banks also saw an increase in their delinquency rates in 2023 compared to the previous year but the rates remained within the range of 0.22 percent to 0.42 percent.

KB Kookmin, Shinhan, Hana, and Woori Bank maintained rates between 0.22 percent and 0.26 percent, while that of NH NongHyup Bank at 0.42 percent. The average delinquency rate of the five major banks was 0.28 percent.

The increase in delinquency rates for regional banks and internet-only banks is attributed to a significant portion of their loans being concentrated in small and medium-sized enterprises (SMEs).

Regional banks also focus on loans to small business owners and self-employed individuals while internet-only banks target borrowers with lower credit.

By Park In-hye and Yoon Yeon-hae

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]